The Republic of Cyprus or simply Cyprus is an island country in the eastern Mediterranean Sea and the third largest and most populous island in the Mediterranean Sea. Cyprus is north of Egypt, south of Turkey, west of Lebanon and Syria, north-west of Israel and finally – south-east of Greece.
As Cyprus is a former British colony, around 80% of the population is relatively fluent in English. Similarly, the legal system is also developed on the basis of the common law practiced in England. Cyprus is a free market economy which offers various opportunities including efficient tax planning for international companies. With top-notch accounting and legal services and an excellent geographic location, Cyprus is a great place to do business. The country is considered a leader among tax planning jurisdictions, so incorporating a company in Cyprus is an ideal way to protect your business. During the past decade, Cyprus' role in international tax planning has grown dramatically. As an EU member state, Cyprus has earned a reputation as a legitimate and reliable jurisdiction with over 40 double taxation treaties and some of the lowest taxes in the EU.
Advantages of acquiring a Cyprus shelf company Once you have decided that Cyprus is the right jurisdiction for your company, you can either incorporate a new company or purchase a ready-made company. Ready companies are legal entities that were formed some time ago and have been “sitting on the shelf” ever since for investors to buy and run that business. Based on this comparison, ready-made companies are also referred to as shelf companies. Buying a shelf company has several advantages.
The main goal of a shelf company is to provide the investor with a company with a clean history, as older companies are often perceived as more trustworthy, reputable and reliable than newly formed companies. Acquiring a shelf company is also faster compared to the process of forming a new company. This turns out to be a great advantage for many entrepreneurs who need to start trading as soon as possible.
Acquisition of a Cyprus shelf company Buying a shelf company in Cyprus is usually a simple and quick process. Companies specializing in the sale of shelf companies offer full service. This means that along with the company itself, they can also provide a full set of corporate documents, company secretary, registered office, nominee shareholders and directors, company bank account with internet bank and debit cards, VAT number and even support for the first year of operation possibly.
Usually the process of a shelf company acquisition is completely organized by the service provider and it only takes 24 hours before you can start trading. The process of buying a ready-made company can differ between different service providers, but usually 4 steps are required to buy a ready-made company:
Step 1. You select a company from a list provided on your service provider's website;
Step 2. Your service provider will send you a bill that needs to be paid;
Step 3. Submit a signed Know Your Client form, a copy of your passport and a utility bill in your name;
Step 4. The service provider prepares your chosen company and all the required paperwork including: all the company incorporation documents, an open share transfer agreement in your name, a Deed of Trust prepared for you by the shareholders and nominee directors and some other informative ones Documents . All documents will be sent to your address on the same day. Since the company is already registered and has a VAT number, you can start trading the same day.
It is important for you to carefully consider which service provider is the most suitable for your needs as their offered service packages differ along with the prices and reliability. It is up to you to do a full due diligence for you to be able to trust your service provider. For example, while some service providers offer shelf companies with an already opened bank account, others offer an opportunity to open it only after the acquisition of the company, which will typically take several days.
Typically, shelf companies have a legal structure of a Private Limited Liability Company, which is also the most popular type of structure among newly incorporated companies. The popularity of this structure can be explained by the limited responsibility shareholders have in regards to the company’s debt and other liabilities. Also, the minimum capital is smaller in comparison to Public Limited Liability Companies – 5,000 EUR.
Offshore Shelf Company In case you are not planning to do business in Cyprus, you may benefit from even more beneficial tax structure. As an international entity you are allowed to conduct any legal business activity, make investments, trade portfolios of bonds and stocks as well as buy and sell real estate outside of Cyprus and not pay corporate tax at all.